Credit > Why Credit Applications are Denied
REASONS WHY YOUR APPLICATION FOR CREDIT WAS TURNED DOWN
When you apply for a credit card, auto loan or mortgage loan and are denied, lenders usually base this decision on your FICO credit score, which is a mathematical score based on (1) how you have paid your bills; (2) amount of outstanding debt; (3) how long you've been using credit; (4) how often you apply for new credit; and (5) what types of loans you have applied for and used.
When lenders order your FICO score from any one or all three of the big credit reporting agencies -- Experian, Equifax and TransUnion -- they are given, not only your FICO credit score, but also a list of the four major reasons why your score is not higher. Reasons given to lenders are based on any one or all of the categories 1-5 listed in the first paragraph and are as follows:
(1) How well have you paid your bills?
Reasons for denial:Delinquency (ies) on accountsTime since delinquency is too recent or unknownToo many accounts with delinquenciesToo few accounts currently paid as agreedToo few accounts with recent payment information Recent derogatory public record or collection notationDerogatory public record or collection account (lien, garnishment, suit)(2) How much debt do you have?
Reasons for denial:Amount owed on accounts is too highAmount owed on revolving accounts is too high (credit cards)Too many accounts with balancesProportion of balances to credit limits is too high on revolving accounts No recent revolving account balances (3) What is your credit history?
Reasons for denial:Account payment history too new to rateLength of credit history is too shortLength of revolving credit history is too shortLack of recent revolving account information Lack of recent installment loan account information No recent non-mortgage balance information 
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